Here's How Stocks Tend To React To State Of The Union Addresses

If history is any indicator, stocks will barely budge tomorrow in response to President Obama's State Of The Union address this evening.

In a note this evening from LPL Financial's Jeff Kleintop, the S&P 500 has averaged just 0.15% since FDR on the trading day following the speech, which will take place at 9 p.m. Eastern.

Here's his chart:

LPL Financial

What's more, stock moves are often unrelated to issues referenced in the speech: Kleintop notes some of the biggest post-SOTU gains and losses have come from coincidental Fed announcements or in response to key economic data.

But that doesn't meant there won't be any reaction. Kleintop says he'll be listening for specifics on three items that could lead to market responses: reinstating tax cuts, energy independence, and housing finance.

"Any mention from the President on a push to reinstate the tax cuts that recently expired would be welcome news for stocks in the industrials sector, he writes. "Reinstating the tax benefits of accelerated depreciation and the research and development tax credit in an effort to promote growth and jobs could be a boost to capital goods producers in the industrials sector."

Meanwhile energy producers could see gains — and oil refiners could see losses — if President Obama makes any suggestion of further expanding infrastructure or exports, he says. Refiners currently enjoy higher margins thanks to the discount in the spread between U.S. and London traded oil contracts. That spread would be narrowed if Obama were to make some kind of reference to expediting approval of the Keystone XL Pipeline.

On the other hand, Kleintop writes, more encouraging words about addressing climate change could negatively impact both subsectors.

Finally, mortgage-heavy banks could be impacted by any references to further expanding housing credit, Kleintop notes.